The Impact of Consumer Protection Laws
Originally published: 06.01.08 by Mike Coyne
Being a good contractor means being truthful and fair. Know what is expected of you.
The hvacr business is, by definition, a consumer business subject to consumer-protection laws. Smart business people realize that these laws are really good for business, since they are very effective tools for putting unscrupulous competitors out of work. But even good hvacr businesses need to be familiar with the consumer-protection laws because they may impact the manner in which you market your services, enter into agreements with your customers, and collect your fees. Here is a quick summary of the major types of consumer-protection laws and how they may impact your business.
Consumer protection is the subject of both federal and state laws. At the federal level, consumer protection is under the jurisdiction of the Federal Trade Commission (FTC). The FTC maintains a Bureau of Consumer Protection whose duty it is to protect consumers against unfair, deceptive, or fraudulent practices in the marketplace. The Bureau conducts investigations, sues businesses who violate the law, develops rules to protect consumers, and educates consumers and businesses about their rights and responsibilities. It also collects information and complaints concerning consumer fraud and shares that information with local law enforcement agencies across the country.
Among the most important federal statutes and regulations concerning consumer protection are the following:
Truth In Advertising Laws
The FTC requires that advertising be truthful and non-deceptive. Advertisers must have evidence to back up claims that are included
Telemarketing Sales Rule
This rule is primarily aimed at combating fraudulent and unscrupulous telemarketers. You are more likely to be concerned, however, with the rules relating to the National Do Not Call Registry. These rules may limit your ability to solicit business by phone.
Truth In Lending Act And Advertising
The main purpose of the Truth in Lending Act is to assure the meaningful disclosure of consumer credit and lease terms, including those in advertisements, so that consumers can easily compare terms and shop wisely for credit. These laws are very important to any consumer business that extends credit to its customers. For example, if you extend repayment terms to your customers and want to charge interest, you must comply with the truth-in-lendingregulations known as “Regulation Z.” Most of my smaller clients do not extend credit to consumer customers because of the difficulty and expense in complying with these rules.
Fair Debt Collection Practices Act
This law prohibits a wide range of collection methods that used to be frequently used by third-party debt collectors. For example, debt collectors cannot contact consumers after 9 p.m. or before 8 a.m. Additionally, consumers cannot be contacted at their place of employment, cannot be falsely threatened, etc. If you use a collection agency to collect bad debts, you want to be sure to choose an agency that is familiar with and complies with this law. In addition to these federal rules, most states have various forms of consumer protection statutes. You will need to be familiar with the specific laws of the states in which you do business. You may find it informative to look at the criteria by which the state of Ohio determines whether a consumer sales practice is “unconscionable.” The following factors are taken into consideration:
• Whether the supplier has knowingly taken advantage of the inability of the consumer. This is to protect the consumer’s interests because of the consumer’s physical or mental infirmities, ignorance, illiteracy, or inability to understand the language of an agreement.
• Whether the supplier knew at the time the consumer transaction was entered into that the price was substantially in excess of the price at which similar property or services were readily obtainable in similar consumer transactions by like consumers.
• Whether the supplier knew at the time the consumer transaction was entered into of the inability of the consumer to receive a substantial benefit from the subject of the consumer transaction.
• Whether the supplier knew at the time the consumer transaction was entered into that there was no reasonable probability of payment of the obligation in full by the consumer.
• Whether the supplier required the consumer to enter into a consumer transaction on terms the supplier knew were substantially one-sided in favor of the supplier.
• Whether the supplier knowingly made a misleading statement of opinion on which the consumer was likely to rely to the consumer’s detriment.
• Whether the supplier has, without justification, refused to make a refund in cash or by check for a returned item that was purchased with cash or by check, unless the supplier had conspicuously posted in the establishment at the time of the sale a sign stating the supplier’s refund policy.
Many states also have enacted statutes dealing with home-solicitation sales. The statutes typically require that the consumer be given a written copy of any agreements that are signed and frequently give the consumer the right to terminate the contract within three business days after the date it was signed. If you are selling service agreements to your customers while you are at their homes, you may have to comply with this type of rule. Check your local laws.
Serving and protecting consumers should always be your top priority. Doing so will make you the contractor of choice.
Michael P. Coyne is a founding partner of the law firm, Waldheger Coyne, located in Cleveland, Ohio. For more information on the firm, visit www.healthlaw.com, or call 440-835-0600. >> To pose a question to Mike, go to www. hvacrbusiness.com/forums.
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